Payday Super: What the Proposed Changes Mean for You

Superannuation payments may be set to undergo a significant change. The Australian Labor Government’s proposed "payday super" reforms would require employers to pay superannuation contributions within seven calendar days of each payday. Draft laws have been released for public consultation, and the changeshttps are expected to take effect from 1 July 2026. It is important to understand what these reforms could mean for you.

According to the Australian Taxation Office (ATO), while many employers meet their obligations, an estimated $5.2 billion in superannuation went unpaid in the 2021–2022 period. The shift to payday super is designed to improve the management of super payments, simplify payroll processes, reduce instances of unpaid super, and ultimately enhance retirement savings for Australians.

For Employers

The transition to payday super represents a significant shift in administrative processes. Key considerations include:

• From 1 July 2026, employers must ensure that super contributions are paid into employees' superannuation funds within seven calendar days of payday, regardless of whether wages are paid weekly, fortnightly, or monthly.
• The draft legislation introduces a concept of “qualifying earnings” (QE), which will replace the current “ordinary time earnings base” for calculating super contributions and any shortfall charges. Shortfall charges will now be based on the qualifying earnings, rather than the higher salary and wages figure.
• The ATO’s Small Business Superannuation Clearing House (SBSCH) will close from 1 July 2026. Employers who currently use this service will need to transition to suitable payroll software.
• The new legislation allows flexibility for paying super to new employees, making out-of-cycle payments, and addressing exceptional circumstances, such as natural disasters.
• The superannuation guarantee charge (SGC) will be restructured to include components such as notional earnings (interest on unpaid super), administrative uplifts, and choice loadings for non-compliance with fund choice rules. Notably, both on-time and late contributions will be tax-deductible, potentially offering financial relief to employers.

For Employees

Payday super offers several potential benefits for employees:

• Superannuation will be paid with each pay cycle, rather than only quarterly. This could allow your retirement savings to benefit from compound interest more quickly.
• The alignment of super payments with your regular wages will make it easier to track whether your employer is meeting their obligations.
• Stronger mechanisms to detect and address unpaid super will be introduced, with employers facing increasing penalties for non-compliance.
• Super funds will be required to process contributions within stricter timeframes, reducing the allocation period from 20 business days to just three business days.

The draft legislation was open for public comment until 11 April 2025, with the introduction of final legislation contingent on the outcome of the federal election on 3 May 2025.

To navigate the complexities of the proposed payday super reforms and prepare your business for the changes ahead, now is the time to seek expert advice. At PKF, we help employers understand their obligations, assess the impact of legislative changes, and implement streamlined payroll and compliance systems tailored to your operations. With 1 July 2026 fast approaching, proactive planning is essential.

Partner with PKF today to ensure you're fully prepared for payday super—efficiently, accurately, and confidently.